Post on 19-Nov-2014
Ryanair Case Study
Mayur Parvani(Roll no 07)
Manuara Chisty(Roll no 08)
Farah Deeba(Roll no 09)
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Agenda Background Industry Key Success Factors Ryanair Strategy Deconstruction Competitive Advantages Value Chain Analysis Growth Possibilities Airline Competitor Responses Future Strategy Conclusion
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Background Founded in 1985:
2 Aircrafts Carried 82,000 Passengers
1991: Michael O’Leary Appointed Transformed to Low Cost Airline 1997: Floated on Dublin SE and Nasdaq Rapid Expansion (2005 Figures):
12 Bases 220 Routes 95 Destinations, Across 19 European Countries 27 Million Passenger Annually
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VMOST
Vision: To be Europe’s Leading Low Fares Airline
Objectives: Number 1 For Customer Service
Strategies / Tactics: No Frills, Low Cost Approach Point-to-point Short Haul Flights Regional and Secondary Airports
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Industry Key Success Factors
Low Ticket Prices Frequent Departures Possibility of Advanced Reservations Reliable Baggage Handling Consistent On-time Services
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External Analysis:Porter’s Five Forces
Threat of New Entrants
MEDIUM
Threat of Substitute Products
MEDIUM
Buyers’ Bargaining Power
LOW
Suppliers’ Bargaining Power
LOW
Industry Competitors
Rivalry Among Existing Firms
HIGH
Source: Adapted from Porter, M. (1998)
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External Analysis:Porter’s Five Forces
Threat of New Entrants Limited, but has happened
recently: BMIBaby.com Easy jet MyTravelLite.com Monarch.com FlyBe.com
Compete on Limited Routes Capital Intensive
Industry Competitors Increased Competition:
50 Budget Airlines Flag Carriers:
Low Cost Affiliates Alliances Air France / KLM Merger
Threat of Substitute Products United Kingdom:
None The Rest of Europe
Driving holidays High-speed trains
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•Increased Trade-union Pressure•Pilot Trade Union
•EU Expansion•EU Abolishment of Duty-free Sales•Allegations of Misleading Advertising
•“Climate Protection Charge”
•Fuel Price Increases•Depreciation of US dollars•EU Commission Rulings:
• Illegal Subsidies from Airports• Overbooked Passenger Compensation• Cancelled Flight Compensation• Reimbursement of Delayed Passengers
Political – legal Economic
Sociocultural Technological
•Europe: Cars & High-speed Trains•Increasing travelling lifestyles•Increasing business travelling
•Wireless Technology Expansion•Internet sales/gambling•Satellite television
• Increased internet competition
External Analysis:PEST Analysis
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Internal Analysis:Porter’s Value Chain
InboundLogistics
Operations OutboundLogistics
Marketing& Sales
Service
Firm Infrastructure
Technology Development
Human Resource Management
Procurement
Primary Activities
SupportActivities
Margin
Mar
gin
Source: Porter, 1985
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Ryanair: Value ChainM
argin
Mar
gin
Minimum Corporate HQ
Low Cost Training
Internet
Boeing Discount
Quality Training
Low Cost Suppliers
Airport Agreements
No Frills
Low Cost*
Quick Turnaround
Reliable Service
Low Cost Promotions
Free Publicity
Controversial
Internet Sales
Yield Management
Limited Resources
Basic/Low Cost
High Productivity
Inbound
Logistics
Operations Outbound
Logistics
Marketing
& Sales
Service
HRM
Infrastr.
Tech. Dev.
Proc.
Limited Crew
Internet Information
Alliances
Management Control
Integrated Systems
Outsourced
In-houseLow Tech Marketing
Internet Sales
Private
Performance Contracts
n/a
Low Cost
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* Low CostCompetitive Advantages
Online Bookings One Class Travel Ticketless Boarding Unallocated Seats Flying to Secondary Airports Point-to-Point Flying In-house Marketing No Frills Reduced Turnaround Times No Refund Policy Corporate Partnerships
No Cargo Service Bargaining Power New Aircrafts Owns Own Fleet Operations Denominated in
Euro Hedge Fuel Risk Highly Successful Ancillary
Service Offering Outsourcing of Services at
International Airports
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* Low CostCompetitive Advantages (Cont.)
Limited Airport Transportation Advertising on Airplanes Yield Management Uniform Fleet High Productivity High Service Levels General Cost Reductions
Eliminating seatback pockets No blankets or pillows Airsickness bags distributed on request Charges larger penalties for overweight luggage
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Ryanair: SW
Strengths WeaknessesLow Cost LeaderInnovative Cost ReductionsFirst-mover AdvantageEstablished Market ShareSubstantial GrowthHigh Load FactorStrong Public ImageEstablished Routes/NetworkRange of Ancillary Services
Poor Employee RelationsVolatile Customer RelationsAntagonistic Relationship with
CompetitorsUncharacteristic Management
ExpansionDependence on Michael O’Leary
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Ryanair: OTOpportunities Threats
Further GrowthAdvanced Cost ReductionOffering Free FlightsEU ExpansionExpansion of ELFAA
Increased Competition:New EntrantsAlliances/Mergers Between
Competitors Industry CriticismAntagonistic Attitude of EU
CommissionersNon Expansion Into New EU StatesTrade UnionismSubstitute Transportation:
Cars,Trains
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Key Success Factors
The Ryanair Business Model EU Deregulation Boeing Discounts EU Expansion Low Acquisition Cost of Buzz The Southwest Effect Effective Publicity Michael O’Leary
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How Ryan Air can survive in future?
Market Characteristics: 7% Penetration (European Market) Ample Growth Opportunity EU Expansion Further Evolution of the Industry
Ryanair Potential: Bargaining Power Competitive Resources
Consolidate: Slower, Calculated Growth
The ten commandments
1)Increase the frequency of existing routes
2)Open new routes in Europe
3)Devlop its small continental bases
4)Expand in Europe
5)Expand in North Africa
6)Agressively seek market share from charter Market
7)Customer Service haul
8)Continue to find ways to reduce costs
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9)Change online image 10)Improve employee relations
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Ryanair Case Study
Questions?
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Thank you for your attention!